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The Improvement of Housing Appraisal Process with Street
Block Housing Price Index
Chung-Hsien Yang National Pingtung Institute of Commerce,
TaiwanSzu-Jung Huang
National Pingtung Institute of Commerce, Taiwan
The 2010 Eureape Real Estate Society Conference June. 25th 2010
What problems in Mass Appraisal?
•Poor attributes
•Limited data records and update
•Accuracy (still not great)
•Limited type (typical only)
•Limited Location
What problems in Location?
• Traditional location—county / district
--Limited identify
--Poor accuracy
• GIS location—(Xn,Yn) relationship
--Poor economics meaning
--Sampling orient in location relationship
Solution in this paper
• Street Block (SB) Price factor
--use the mean price in street block (single or merge street blocks)
--Modeling by sorting or comparison the Street Blocks
Advantage in SB solution
• Smaller location from traditional
• Real and stable location relationship
• Clear economics meaning
• Easy to judge the location factor and
comparison the samples’ relationship
The Data(1/2)
• The transaction records of housing from broker in Da-An district/Taipei/Taiwan
• 2958 observations in 2006Q1~2008Q3 and 15% of market share in Da_An district
• Building type: all is apartment house• Outliers detected (MRA model) and delete• 10% out-sample and 90% in-sample by
Quarterly district stratified random sampling
The Data(2/2)
• We follow Yang and Huang(2009) developed street block price index in Da_An district/Taipei city.
• We use MRA with street block dummy and 3 years panel data model.
• There are 47 blocks in the index.
Taipei city Taipei city (( 台北台北市市 ))
Daan district ( 大安區 )
Daan district ( 大安區 )
MRT : Zhongxiao Fuxing( 忠孝復與 )
MRT : Zhongxiao Fuxing( 忠孝復與 )MRT:Taipei main station
( 台北車站 )MRT:Taipei main station
( 台北車站 )
105-117 100-105 96-100 91-95 86-90 81-85 76-80 70-75
Daan district ( 大安區 )
Daan district ( 大安區 )
Describe the Data of Da-An/ Taipei
Variables Mean average STD Deviation
Total Price (US$) 436.2 K 245.0 K
Price per M sq 4.1 K 1.2 K
Building Area 106.2 M sq 51.0 M sq
Land Area 21.7 M sq 13.6 M sq
Floor no. 5.5F 5.2F
Total Floor 8.6F 4.5F
Building Age 23.7Y 9.8Y
The Model
• The OLS form (semi-log)
TLXP)ln(
P: total price
X: attributes of house
L: location or street block factors
T: Timing dummy variables
5 modelsModel Setting Description
Model1 no street block factor
Model2 L: street block price index
Model3 L: 21 dummies in 22 street blocks
Model4 L: 2 dummies in 3 parts from SBPI
Model5 L1: L in model3
L2: L in model4
TLXP)ln(
TLXP)ln(
TLLXP 21)ln(
TLXP)ln(
TXP)ln(
The Variables• Attributes of house: building area, sq. term; building
age, sq. term; xth of floor, sq. term; total floor; building type; land area; MRT distance; car site dummy
• Time Dummy var. : 2006Q1~2008Q2=1, 2008Q3=0
Empirical process
• Sampling 100 times by quarterly for insample(90%) and outsample(10%)
• Run model1~model5 by various insample
• Check HitRate(10%, 20% of bias) and MAPE (mean absolute percentage error ) by various outsamples
• Test the difference of various models by t test.
Hitrate and MAPE
%100
)%)1((ˆ)%)1((
n
PaPPPaPcountHitRate
n
i i
ii
P
PP
nMAPE
1
%100ˆ1
THE OUTPUT(1/4)(Hit Rate, 10% error)
Model HitRate
Paired t test (t value), *:
H0:
Mn-M1=0
(n~2,3,4,5)
H0:
M5-M2=0
H0:
M5-M3=0
H0:
M5-M4=0
1 45.00%
2 45.34% 2.43*
1.99*
3 45.58% 2.61*
1.21
4 45.41% 2.06*
1.67*5 45.76% 3.43**
THE OUTPUT(2/4)(Hit Rate, 20% error)
Model HitRate
Paired t test (t value)
H0:
Mn-M1=0
(n~2,3,4,5)
H0:
M5-M2=0
H0:
M5-M3=0
H0:
M5-M4=0
1 73.17%
2 74.23% 8.11**
11.62**
3 75.95% 13.71**
5.21**
4 73.90% 4.37**
13.51**5 76.49% 14.48**
THE OUTPUT(3/4)(MAPE)
Model MAPE
Paired t test (t value)
H0:
Mn-M1=0
(n~2,3,4,5)
H0:
M5-M2=0
H0:
M5-M3=0
H0:
M5-M4=0
1 15.19%
2 15.03% -7.28**
-15.75**
3 14.59% -16.89**
-9.06**
4 14.98% -9.48**
-17.92**5 14.47% -19.49**
THE OUTPUT(4/4) (MAPE, Hit Rate)
Building
AreaModel
Hitrate
(10%)
Paired
t test(t value)
Hitrate
(20%)
Paired
t test(t value)
MAPE
Paired
t test(t value)
Under
54M2
1 42.33%12.62**
74.05%13.84**
15.36%-21.08**
5 53.54% 81.72% 12.31%
54M2~2
00M2
1 47.58%9.54**
77.55%21.49**
13.48%-25.78**
5 50.57% 82.04% 12.51%
Upper
200M2
1 47.62%-1.47
71.13%2.12*
15.79%1.06
5 45.44% 73.60% 16.21%
Conclusion• The Street Block Price factors has more
quality control and better accuracy than traditional Mass Appraisal.
• Both the relationship of street blocks in price and the level of street block price have improved for Mass Appraisal.
Thank You